China's Emerging Financial Markets

The third Deals Roundtable, entitled "China's Emerging Financial Markets: Opportunities and Obstacles," was held on January 19, 2006. It focused on China's emerging financial industry, in particular the impact of inbound investment into China and the role of China's legal and institutional infrastructure.

Wei Christianson '89, the lunchtime keynote speaker, provided personal insight into the development of China's financial markets through her extensive on-the-ground career.

Understanding how China's financial system will develop is key to understanding an increasingly integrated global financial marketplace. The Roundtable addressed two principal forces that are impacting that system - foreign banks and investment, and China's legal and institutional infrastructure. Speakers and panelists provided both a deeper understanding of the opportunities and obstacles facing China and a backdrop for broader analysis of the issues, domestic and international, that face an emerging financial superpower.

A panel, moderated by Katharina Pistor (Columbia Law School), and featuring Jon Christianson '89 (Skadden, Arps, Slate, Meagher & Flom LLP), Nicholas Howson (Michigan Law School),Nicholas Lardy (Institute for International Economics), Barry Metzger (Baker & McKenzie),Michael O'Hanlon '88 (Shenzhen Development Bank), and Kenneth Willman (Goldman, Sachs & Co.), discussed the substantial transformation of China's banking sector and the role being played by foreign banks. During much of China's remarkable growth period the banking sector has been neglected, but this has been changing. China has slated several state-owned banks for initial public offering and has invited international investment banks to participate in the preparation of these offerings and to commit to acquiring a stake in these banks. Several banks have already taken up this offer and others are getting ready to do so as well. Panelists addressed whether this strategy will work for China and for the foreign banks involved.

At the same time, particular consideration needs to be taken regarding the impact of China's legal and institutional infrastructure on its evolving financial industry. Franklin Allen (Wharton School of the University of Pennsylvania) led off this discussion with a presentation to Roundtable participants. A second panel, moderated by Benjamin Liebman (Columbia Law School), and featuring Franklin Allen, Donald Clarke (George Washington Law School), Robert DeLaMater '84(Sullivan & Cromwell LLP), Robert Dohner (U.S. Department of Treasury), and Yasheng Huang(MIT Sloan School of Management), then examined the relationship between China's legal system and its financial system; the importance of the legal system to China's past and future economic development; and possible legal mechanisms for addressing problems in the financial sector.